Syria: Research Terms of Reference – SYR2211 Enterprise Cost Assessment, North East Syria (September 2022, Version 1) – Syrian Arab Republic

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2. Rationale

2.1 Background

Economic activity in Syria has halved since the start of the conflict in 2011 due to major losses in human capital that have disrupted social and economic networks, destroyed infrastructure, degraded basic services and disrupted trade. On top of that, the Syrian economy has suffered from COVID-19, prolonged droughts and changing weather conditions, rapid currency depreciation, high inflation and the ripple effects of the crises in Lebanon, in Turkey and Ukraine. These factors have contributed to driving up the prices of basic commodities and fuel, significantly eroding the purchasing power of the population, one of the main drivers of humanitarian needs. A multi-sectoral needs assessment in 2021 showed that a majority of NES respondents said they could not afford essential items in the market where prices are highly volatile. According to the Syria Joint Market Monitoring Initiative, the price of the food component of the Minimum Survival Expenditure Basket in the NES has increased by 70% in the past six months. Insufficient income and lack of employment opportunities force households in the NES to resort to negative coping strategies, including borrowing money to buy food or other essentials, sending children to work and buy items on credit.8 Recent labor market assessments in the NES found that more than two-thirds of respondents in both Al-Hasakeh city and Ar-Raqqa city said a lack of job opportunities prevented them from finding a job, while another third of respondents in both cities cited high competition for jobs as a major barrier to finding a job . 9 In addition, 38% of respondents in ArRaqqa and 22% of respondents in Al-Hasakeh said they wanted to start their own business but lacked the resources to do so.

In this context, the Economic Recovery and Livelihoods (ERL) NES sector has prioritized the implementation of livelihoods interventions to help households meet immediate needs and assist socio-economic actors. -economics, including individuals and MSMEs, to drive local economic activity and job growth within the targeted timeframe. communities. This has involved, among other activities, providing cash grants to businesses, focusing mainly on micro and small businesses to date. In a bid to broaden and better target this support to include a wider variety of business sizes and sectors, ERL actors need more information on the real operating costs faced by MSMEs. in NES in different sectors, as well as on the main challenges that business owners face in maintaining or growing their businesses.

2.2 Expected impact

Access to livelihood opportunities is consistently reported as one of the top priorities for Syrians in the NES to enable greater autonomy and agency. a major role in improving well-being at the individual, household and community level, ultimately reducing dependence on external aid. However, there is currently little information on the true costs of business expenditure in NES, particularly for businesses larger than micro-enterprise size, to enable actors providing or wishing to provide financial support ensure that subsidies respond to economic realities on the ground. As such, the CBA would enable the development of evidence-based guidelines for organizations to set the value of their business grants by consolidating what is already known about the cost structures of micro-businesses. which provide important household-level support to vulnerable families, while also providing new information to support large businesses in different sectors that have the potential to impact job creation within the community. In addition, a better understanding of the barriers business owners face in maintaining or growing their business would help ERL actors design their grant value transfer programs and foster closer linkages with other ERL activities. that aim to improve livelihoods, improve access to basic services or rehabilitate value chains. As such, REACH, in partnership with the NES ERL Working Group, will conduct a cost-benefit analysis in selected NES markets to assess the cost of spending for MSMEs and support the development of an MEB that could in turn guide the financial support provided to MSMEs.

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